Apple (AAPL): fair value

Fair-value band

The normal range for this name runs from $261 (cheap) to $352 (expensive); it is now priced at $343.

That is 1.2σ above this name's own normal premium.

Is Apple undervalued?

Fair, relative to its own history. Apple trades at $343, 44% above the fair value this model estimates, but it has habitually traded 29% above fair value, and today's gap is 1.2σ above that norm, within the range it normally trades in, so the verdict is Fair: priced normally for itself, not necessarily fairly valued.

Diligence checklist

7 pass · 2 fail · 2 no data

• PASSCash actually collected from profit, last 12 months: 113%XBRL · Apple gets $1.13 of real cash for every $1 of reported profit which means profits are real and not just numbers on paper. That's a good sign.
• PASSGap between paper profit and real cash: -5.0%XBRL · Apple's "profit on paper" and "cash in the bank" gap is small enough to pass.
• PASSDebt compared to one year of cash earnings: 0.25xXBRL · Apple could pay off everything it owes, net of the cash it holds, with 0.25 of a single year's earnings. My limit for a name I would buy is three years, so debt is not a risk here.
• PASSHow much more it earns on capital than that capital costs: +53.87ppXBRL · Return on capital is far higher than what that capital costs, so every dollar Apple puts to work turns into much more than a dollar of value. A +54 point gap is enormous. This is one of the best capital-compounding machines that exists. The gap is wider than it was at the start of the window.
• FAILStock sold by executives and directors on the open market, last 6 months: $86.7MEDGAR (dealbreaker) · Levinson Arthur D sold $86.7M of stock in the last 6 months, outside any pre-planned selling schedule, and $86.7M went out that way in total. My rulebook says more than $5 million of this kind of selling is disqualifying for a "long" position (buying the stock). A further $92.9M went out under pre-planned 10b5-1 schedules, which I don't count: those sales are set up months ahead and say nothing about what management thinks today. Options being exercised, and shares held back to cover the tax on them, are not sales and I don't count them either. filing ↗
• FAILHow long the CEO has run this company: 0.1 yearsTEXT · Apple's chief executive took the job on September 1, 2026, 0.1 years ago. I want a full cycle at the company, which I take as 5 years, before a management record tells me anything: a short run has not yet been tested by a bad year. filing ↗
• PASSProfit margin held up during the last sales slump: 38.5% vs 39.9% baseXBRL · The last time Apple's revenue fell, its profit margin per unit sold only slipped a little, from about 39.9% to 38.5%. It means Apple isn't being forced to cut prices to keep product moving, which is what a company with a weak competitive position has to do. This is the accounts talking, not the filing: I'm reading the 3 quarters from September 2016 to April 2017, measured against the year going into it, and a shift in what the company sold can imitate pricing power either way.
• PASSNormal profit margin across a full business cycle: FCF margin 29.3% vs 27.1% medianXBRL · Apple's current cash margin (29.3%) is a bit above its long-run average (27.1%). This is a mild warning rather than a problem: don't assume today's good margin lasts forever. My valuation grows the long-run average, not the temporarily high figure. Across the window the margin ran between 23.5% in June 2025 and 29.3% in June 2026.
• N/AHow much of the stock trades on an average day: $12,832MMARKET · Apple trades so much volume that this basically isn't a concern. There's no pass or fail here because the answer depends on how big a position I'd actually want to take.
• N/AShare of revenue from its single biggest customer: not establishedTEXT · I fetched and read Apple's October 31, 2025 10-K but found no sentence about customer concentration. That isn't the same as the filing saying there is none: it may simply be worded in a way my search doesn't catch. Read Item 1 and the concentration-of-risk note yourself before trusting this row. filing ↗
• PASSWhether the company switched auditors in the last 2 years: noneEDGAR · Companies sometimes switch accounting auditors right before something bad is uncovered which can be a warning sign. Apple hasn't changed auditors in the last 2 years, so there's no such red flag here.